Friday, August 30, 2013

The Brennan Center regularly compiles the latest news
concerning the corrosive nature of money in New York State politics—and the
ongoing need for public financing and robust campaign finance reform. We’ll
also be linking to dispatches from around the country highlighting the national
scope of this crisis. This week’s links were contributed by Syed Zaidi.

An op-ed by Susan Lerner, the executive director of Common
Cause/NY, appeared
in the Daily News this Wednesday asking the New York City Council to bring
greater transparency to the city elections process. New York City voters this
year are facing a plethora of advertisements and mailings from outside special
interests hoping to swing the upcoming elections in their favor. Following the
U.S. Supreme Court’s Citizen United decision, corporations and unions are free
to spend unlimited amounts of funds garnered from mega donations to boost their
preferred candidates. For example, Jobs for New York, a group representing real
estate interests, has
spent $167,341 in support of Sara Gonzalez’s run for the 38th City Council
district – an
amount two times greater than what Gonzalez has spent herself. Jobs for New
York has received more than $6 million from 116 limited-liability corporations
– which were in turn used to funnel money from just 22 backers. Common Cause/NY
is urging the City Council to pass
legislation introduced by City Councilman Brad Lander which would require
city campaign ads paid for by independent expenditures to list the top five
contributors on the ad itself. “Independent expenditures unfairly color the
campaign process by dominating the conversation with the point of view of a
particular interest… First and foremost, voters need to know who is sponsoring
the advertising they receive,” Lerner said.

Hedge Fund Donations to NYC Elections Pale in Comparison to
State Contributions

Hedge funds have donated
$500,000 to New York City races thus far. A significant portion, $170,336 has
gone to City Council Speaker Christine Quinn’s mayoral campaign. The next
closest recipient, Republican candidate Joseph Lhota, has received $47,625 from
hedge funds. The $500,000 figure is small in comprasion New York State
elections, where hedge funds – donating upwards of $7 million in the 2010
election cycle – are now the second-largest contributors after the real estate
industry. The difference is largely due to New York City’s contribution limits,
which are far lower than the state’s. James S. Chanos, founder of Kynikos
Associates, who has not made any contributions in 2013 New York City races, explains
that “limits are a big aspect to it, and I think people would give more if the
limits were higher. At the federal and state level, we are constantly being
called [about donations].” No one calls for contributions at the city level, he
added.

New York City mayoral candidate Bill Thompson’s campaign
strategist, Jonathan Prince, has filed a complaint with the city Campaign
Finance Board seeking
an investigation into fundraising events held for Democratic rival Bill de
Blasio. De Blasio held fundraisers at the Villa Pacri restaurant in the
Meatpacking district last year. The restaurant charged the de Blasio campaign
$4,349.53 for drinks and appetizers for 75 people at the two events last year.
The per-person per-hour rate amounts to $22.50, but a different group of the same
size was charged
$58.33 per-person per-hour just two days later. The complaint alleges that
the difference between the “fair market value and the $22.50-per-person cost”
is an in-kind campaign contribution. The campaign finance law iterates that
candidates must pay fair market prices for campaign goods and services. De
Blasio’s campaign dismisses the charge, saying that the price difference was
due to differences in what the groups were served.

NATIONAL

Ben and Jerry’s Co-Founder: Education Costs Linked to Flood
of Money in Politics

As the new school year approaches, President Obama has been
traveling around the nation to discuss ways to address the high cost of
education. Ben Cohen, co-founder of Ben and Jerry’s Ice Cream, and Edward
Erikson, senior associate at MacWilliams Sanders Communications, write
in a CNN op-ed that if the President is serious about tackling the issue of
affordable education and student debt, then “we need to strike at the root of
the problem – the influence of money in politics.” Cohen and Erikson write that
Sallie Mae benefits from cheap loans from the government and have an interest
in protecting the status quo regarding student debt. Sallie Mae has donated
over $1.26 million to federal candidates and parties in the last four
election cycles, and bankrolled $1.93 million into lobbying Congress in 2013.
During that time period, Congress drafted and the President signed a student
loan bill tying interest rates to financial markets. Although in the short term
the bill prevents interest rates from doubling, now students are
vulnerable to adjustable interest rates that could top 8.5 percent.
Meanwhile Sallie Mae borrows at subsidized interest rates below %0.5 percent
from the Federal Home Loan banks. In 2012, Sallie Mae earned $2.5 billion in
interest payments from student loans. Cohen and Erikson call on citizens to stamp currency with messages to get
the word out about reform and support referendums calling on Congress to
redefine the Constitutional line between money and free speech.

Watchdog Groups Urge FCC to Expand Spending Disclosure

A broad coalition of transparency groups, dubbed the Public
Interest Public Airwaves Coalition, have submitted
comments to the Federal Communications Commission (FCC), regarding the
agency’s rules mandating broadcasters to post political files online. In April,
2012, the FCC started requiring broadcasters in the top 50 U.S. markets,
affiliated with the four major national networks, to
post files online containing information on political advertisements;
specifically the group’s purchasing ads, prices paid and the times aired. The FCC
has proposed expanding the ruling to all stations by July, 2014. This could
have a big impact on transparency in next year's elections. Of the 10 races
that will determine control of the Senate in 2014, more
than half will take place in states that have no online ad disclosure
under the current FCC order. Groups have called for improvements to the system
including uniform data and reporting standards, adoption of machine-readable
data, and a more user-friendly database that can assist with reducing reporting
errors, monitoring compliance, and analyzing data. The Sunlight Foundation’s Political Ad Sleuth provides a
searchable database of the FCC files, a project that would be strengthened by
an improved disclosure regime.

New Investigation Reveals Donors behind Voter ID in North
Carolina

A new
investigation by the Institute for Southern Studies has revealed several
connections between Republican mega-donor Art Pope and the push for restrictive
voting legislation in North Carolina. North Carolina House
Bill 589 (now State Law 2013-381) raised significant outcry from civil
rights advocates when it was signed by Republican Governor Pat McCrory this month.
The bill mandates photographic identification, cuts the early voting period
from 17 days to 10, ends same-day voter registration and eliminates rules
encouraging youth to sign up to vote. The prime sponsors of the bill, including
N.C. Representatives Harry Warren and Tom Murry, have received
generous support from Art Pope and organizations that garner significant
funds from the donor. In 2010, Warren narrowly defeated a five-term Democratic
incumbent by fewer than 200 votes. His campaign benefited from over $109,000 in
independent spending from Real Jobs N.C., a 527 committee co-founded by Pope. Murry
also got significant funds, including $12,000 in campaign contributions from
the Pope family, as well as over $92,000 in favorable independent spending from
outside groups, such as Real Jobs N.C. and Civitas Action. Governor McCrory
received $20,000
in contributions from Pope and his family, and benefited from independent
expenditures from Pope-funded groups including $380,000 by Real Jobs N.C. and
$130,000 by Americans for Prosperity.

Rise of “Obamacare Lobbyists” on K Street

The Affordable Care Act has boosted the demand for lobbyists
and consultants who helped shape the law, as new regulations are being
fine-tuned and implemented. More than 30
former Obama administration officials, lawmakers and Congressional staffers who
worked on the healthcare law have become lobbyists since 2010. They’ve
found clients like Delta Air Lines, UPS, BP America and Coca-Cola, as well as healthcare
companies including GlaxoSmithKline, UnitedHealth Group and the Blue Cross Blue
Shield Association. Watchdog groups have criticized the rise of “Obamacare
lobbyists” as another example of the revolving door that turns public service
into private enrichment. Craig Holman of Public Citizen says, “It raises
questions about the [bill’s] integrity.” The firm Avenue Solutions has recently
hired Yvette Fontenot, a former staffer for both a Senate committee that wrote
Obamacare’s tax provisions and the Health and Human Services Office of Health
Reform, one of the bill’s implementers. Since April, the firm has picked
up the Health Care Service Corporation as a client and is on pace to earn $1.8
million in the first half of 2013. Healthcare lobbying will remain a bright
field of work as the reform law’s requirements continue to roll out over the
coming decade.

Friday, August 23, 2013

The Brennan Center regularly compiles the latest news
concerning the corrosive nature of money in New York State politics—and the
ongoing need for public financing and robust campaign finance reform. We’ll
also be linking to dispatches from around the country highlighting the national
scope of this crisis. This week’s links were contributed by Syed Zaidi.

The New York State Joint Commission on Public Ethics
recently granted
an exemption to Naral Pro-Choice New York from regulations requiring
tax-exempt organizations that participate in political activities to disclose
their major donors. The law allows exemptions for groups whose donors might
face “harm, threats, harassment or reprisals.” Naral Pro-Choice points to past
threats as evidence of the danger that disclosure would create: disturbing
handwritten letters and Facebook posts by a man who was later convicted of participating
what he thought was a plot to bomb an abortion clinic. Many groups from across
the political spectrum are now
seeking the same exemption, arguing that publicly disclosing their donors
could endanger them. New York’s broad definition
of lobbying includes spending on advertisements for or against legislation.
Groups that devote a substantial amount of their resources to lobbying have to
disclose all donors that contribute more than $5,000. According to Kelly
Williams, corporate general counsel at the Brennan Center, exemption from disclosure
should only be granted in instances of credible threats or harassment, not for
fear of economic harm, such as boycotts. The New York Times concurs, stating
in a Wednesday editorial that “Otherwise, big-money partisan lobbying via
hidden backers will only proliferate as the public heads deeper into the dark,
and the ethics law itself will begin to unravel, thread by thread.”

Super PACs Active in New York City Elections

Super PACs, independent political action committees with no
restrictions on campaign spending, are shelling
out cash for flyers, robocalls and TV ads in New York City elections.
Forward NY is one
of six Super PACs active in the city. It recently sent thousands of emails
attacking the former governor Elliot Spitzer for his attempted comeback into
politics. Jobs for New York, a group backed by the Real Estate Board of New York,
has spent $314,000 on City Council races. Three former aids to Rudy Giuliani
are also forming a Super PAC to support Republican mayoral candidate Joe Lhota.
Government watchdog groups have criticized the independent expenditures because
they undermine the city’s public financing system, which imposes contribution
and spending caps on candidates. “Skewing by big donors is a serious matter,”
according to Eric Lane, the dean of Hofstra University Law School, who helped
write the city’s campaign finance law. The only check on Super PACs in the city
is a state election law barring an individual from making more than $150,000 in
annual contributions to all state and local campaigns combined.

City Comptroller Candidates Discuss Campaign Finance

The candidates for New York City Comptroller traded
shots at each other over how their campaigns are financed in a debate last
week. The debate was the first in a series administered by the New York City
Campaign Finance Board (CFB). Manhattan Borough President Scott Stringer is
participating in the CFB matching funds program, which provides him with a
$6-to-$1 match for every donation he raises up to $175. Consequently Stringer
also has to abide by strict contribution limits and a spending cap of $6
million. Spitzer joined the race after the CFB deadline and is self-financing
his campaign. Stringer accused Spitzer of “trying to destroy one of the best campaign
finance systems in the country” at the debate. Spitzer fired back saying that
Stringer had benefited from independent expenditures from a coalition of
women’s advocates, business and labor leaders.

NATIONAL

Rep. Van Hollen Files Suit Against IRS

Representative Chris Van Hollen (D-MD) has
filed suit in Federal District Court to overturn an Internal Revenue
Service ruling on tax-exempt “social welfare” organizations that engage in overtly
political activities. Three government watchdog groups, Democracy 21, Public
Citizen and the Campaign Legal Center, are joining the suit. The tax statute
confers 501(c)(4) tax-exempt status only to groups that “exclusively” engage in
non-political social welfare work. For decades, however, the IRS has only
required 501(c)(4)s to make social welfare their “primary” purpose, allowing
significant political activity. “The point here is that the law is clear,” Representative
Van Hollen said.
“What do you want us to do — put an exclamation point after exclusively?” As
opposed to traditional PACs and Super PACs which fall under Section 527 of the
IRS Code, the concern arises over the ability of the 501(c)(4)s to spend on
politics without
disclosing their major donors. Following the Supreme Court’s Citizen United
decision, $256
million was pumped into political ads in the 2012 presidential election
cycle, three times more than the amount spent in 2008.

In August Recess, Congressmen Globe-trot on Privately
Financed Trips

While many Americans are concerned about making ends meet
this summer amid oncoming sequestration cuts, Congressmen are using
the summer recess to travel around the globe on privately financed tours,
some paid for by lobbyists. Congress clamped down on such travel in 2007 when a
scandal involving lobbyist Jack Abramoff and free trips was exposed. Abramoff
was later sentenced to prison on corruption charges, which also engulfed former
Representative Bob Ney (R-OH) and some Congressional aides. But the trips
haven’t stopped; expeditions to Turkey and Israel, paid
by private groups and foreign government have been especially popular. Four
House Republicans and a Democrat who are members of the “Friends of Scotland
Congressional Caucus” are headed to Scotland this month, on the Scottish
government’s tab. Bill Allison, editorial director of the Sunlight Foundation,
is concerned that the trips may make lawmakers feel indebted to the sponsors,
especially when they include free food, hotels, tours and transportation. There
have been 1,363 trips at a cost of $3.2 million to hosts so far this year.

Race for Governor in Virginia Invites Super PACs

The race for governor in Virginia is heating up as the
candidates attract massive contributions. In the month of July, DGA Action, a
Super PAC of the Democratic Governors Association, contributed
$1.2 million to Terry McAuliffe, a Democratic candidate for governor, one
of the largest single political donations for the office in recent history. Virginia
has no
limits on contributions for candidates to state offices.McAuliffe’s Republican opponent, Virginia
Attorney General Kenneth T. Cuccinelli II has received several large donations
including $5.6
million from the Republican Governors Association. And the race has turned
extremely partisan and bitter with each candidate accusing the other of ethical
lapses. McAuliffe has attacked Cuccinelli in a television ad criticizing $18,000
in gifts Cuccinelli received from a prominent GOP donor, Star Scientific CEO
Jonnie R. Williams, Sr. Cuccinelli has penned an op-ed accusing GreenTech
Automotive, an electric car company founded by McAuliffe, of dubious practices
to attract foreign investors.

Small Business Leaders Ask SEC to Adopt Disclosure Rule

Aimee McQuilkin, a leader in the Montana Small Business
Alliance, and Freddy Castiblanco, a leader of Small Business United New York, have
authored an op-ed
in The Hill arguing for the Securities and Exchange Commission to establish
a rule regarding disclosure of political spending by corporations. Currently
public companies that spend money on politics are not obligated to report such
spending to investors or the government. Several small business trade groups
have signed
onto a letter urging the SEC to adopt the proposed disclosure rule, in an
effort to generate greater transparency. “Under current rules, money from the
general treasury of a public company can be disbursed to fund political
activities without the owners (the shareholders) having any way to know about
it.” Hardworking small business owners understand that success in the
marketplace should be determined by innovation and healthy competition, not
pay-to-play politics or secret back-room politicking.

Friday, August 16, 2013

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

The former head of the Metropolitan Council on Jewish Poverty, William
E. Rapfogel, is under
investigation by an anticorruption task force formed by the state’s
attorney general and comptroller. Rapfogel has been accused of overpaying the
Met Council’s insurance company, Century Coverage, and asking the insurer to
contribute to certain political candidates. On Monday, he was removed from his
position at the charity after an investigation by outside counsel. Rapfogel has
long been a power player in the Jewish community and both city and state
politics, and his wife has served as chief of staff to Assembly Speaker Sheldon
Silver for many years. Rapfogel’s lawyer said that neither his wife nor Speaker
Silver were aware of his actions. As the investigations unfold, New York City
has suspended
all funding to the Met Council, and several mayoral candidates have returned
contributions from Century Coverage.

Some freshmen in the U.S. House of Representatives are
seeing a flood of donations due to their position on the Financial Services
Committee. The panel is sometimes called “the cash committee” because of its
members’ ability to attract big contributions; for example, PACs have
donated more than $10 million to Financial Services Committee members, more
than any other committee. Seven freshmen Democrats on the committee have raised
more PAC money from the financial industry than minority committee chair
Representative Maxine Waters (D-CA). One lobbyist made the financial industry’s
intention clear: “It is almost like investing in a first-round draft pick for
the N.B.A. or N.F.L. There is potential there. So we make an investment, and we
are hopeful that investment produces a return.” These freshman also joined
with Republicans earlier this year, over the objection of Representative
Waters and the Obama administration, to roll back some of the strictest
provisions of Dodd-Frank financial reform. Freshman Representative Andy Barr
(R-KY), who has received $150,000 from the financial industry in only six
months, has also been a vocal critic of financial regulations. Last month, he introduced legislation
to eliminate a new federal rule intended to prevent banks from issuing
mortgages to customers who could not afford to repay the debt – a measure that
was backed by bank lobbyists that had visited his office. Former Representative
Brad Miller (D-NC) explains, “It’s only natural that it has got to be on your
mind that a vote one way or other is going to affect the ability to raise
money.”

Thirty-One Percent of Former Governors Now Work As Lobbyists or
Consultants

A review of post-government employment for 32 former governors by USA
Today, shows that 31 percent of them now work for trade associations,
consulting businesses or lobbying firms. The revolving door between Congress
and K Street has been widely discussed in the press: two-thirds of former
Congressmen from the 112th Congress now work for lobbying firms or industries
that lobby the federal government. Now “Governors are seeing that it’s
lucrative to trade in on their public service” as well, according to Danielle
Brian, executive director of the Project on Government Oversight. Earlier this
year, former Pennsylvania Democratic governor Ed Rendell wrote an op-ed
urging New York state officials to allow hydraulic fracturing. He also
worked as a paid consultant for a private equity firm with investments in the
gas industry, a fact he failed to disclose at the time of publication. Former
Mississippi governor Haley Barbour, a Republican, now runs a lobbying shop in
D.C. that hosts multinational clients including Chevron, Toyota and Motorola.
Former Kansas governor Mark Parkinson, a Democrat, is now president and CEO of
American Health Care Association, which spent $2 million on lobbying Congress
on legislation related to assisted-living facilities and nursing homes.

Former Rep. Kennedy: Elections Need Transparency

Former Congressman Joseph P. Kennedy II (D-MA) urges the IRS, in a Boston
Globe op-ed, to bring transparency for citizens to the election process. In
accordance with the current interpretation of the law, groups organized under
section 501(c)(4) of the tax code are allowed to spend up to 49 percent of
their funds on politics. Although legitimate 501(c)(4)s spend over $40 billion
annually on social welfare projects, the law allows political groups to collect
and spend exorbitant sums on narrow political goals without having to disclose
their donors, as they would if they were organized as political committees. In the 2012 election cycle, politically
active 501(c)(4)s spent nearly $300 million. Yet many of these same groups
checked “no” on their tax forms when asked if they plan to engage in campaign
activity. “No one should be able to spend tax-free dollars — or be able to
deduct donations as a business expense — to elect candidates” Kennedy argues.
Unfortunately, the IRS has been relying on key word searches such as “tea
party” and “occupy” to examine 501(c)(4)s that may be using tax-free money for
political activities. What is ultimately needed, Kennedy argues, is federal
legislation to close the loophole, but he suggests the IRS improve transparency
by requiring political contributions of $250 by 501(c)(4)s to be publicly
reported, and codifying regulations for what constitutes political speech.

NYC Public Advocate: 28 States Already Possess Power to Mandate
Disclosure

Federal laws and regulations are one avenue for enhancing transparency
in our elections. Enacting strong disclosure regimes in states is another. In a
new report, “Building a
Frontline Defense to Stop Secret Political Spending,” New York City Public
Advocate Bill de Blasio outlines that 28 states already have the ability to
tighten rules around independent expenditures. These states can use legal
or regulatory authority vested in the Attorney General or the Secretary of
State to help unmask major donors to 501(c)(4) groups – organizations that seek
to sway local and state elections without disclosing who bankrolls their
efforts. This summer, New York Attorney General Eric Schneiderman led the way
when he crafted
new regulations requiring groups that spent more than $10,000 on New York
elections to file itemized lists of expenditures above $50 and donors that gave
over $1,000. This type of rule has the potential to bring massive amounts of
political spending into the sunlight. IRS applications for non-profit 501(c)(4)
status more than doubled during the presidential election – from 1,735 in 2010
to 3,357 in 2012, and spending shot up from $92.2 million to $256.3 million.

Fundraising Now Increasingly Important in Congress

With growing
partisanship and excessive demands for fundraising, many former Congressmen
are glad they are no longer on Capitol Hill. Representative Rodney Alexander
(R-LA) announced this week that he would retire after serving 10 years in the U.S.
House, citing frustrations with continual gridlock on important issues. “Rather
than producing tangible solutions to better this nation, partisan posturing has
created a legislative standstill.” Former Representative Brad Miller (D-NC) also
expressed dissatisfaction with Congress, noting the consistent demand for
raising money. Following the Citizens United decision, independent expenditures
have flooded elections, and members must raise more and more money to keep
their jobs. Recent live tweets
about a freshman Congressmen’s attempt to raise money are illustrative of the
broader problem. Miller reflected, “It’s hard to imagine that that's really
what democracy should really be about. It means that members of Congress have
to spend their time in a little room with a phone, calling up lobbyists and
asking them to contribute from their PACs, then rushing to the floor to vote on
a lot of issues that very few members have had time to think about and
certainly not to shape in any important way.” Sunlight Foundation’s Party Time app
reveals that there were 12 political fundraising events this week, and 55 this
month, despite the August Congressional recess.

Monday, August 12, 2013

The Brennan Center regularly compiles the latest news
concerning the corrosive nature of money in New York State politics—and the
ongoing need for public financing and robust campaign finance reform. We’ll
also be linking to dispatches from around the country highlighting the national
scope of this crisis. This week’s links were contributed by Syed Zaidi.

A “Moreland
Monday” analysis by Common Cause/NY is raising serious questions about
millions of dollars in campaign contributions from real estate and development
interests in New York City. Between 2011 and July, 2013 the Real Estate Board
of New York (REBNY), a trade group of 37 real estate companies, contributed
over $1.7 million to Senate Republicans, $478,000 to Senate Democrats, and
$249,000 to Senate Independent Democrats. In the Assembly, the Democrats
received $305,000 from the group, while Republicans accepted $67,000. REBNY
also takes full
advantage of New York’s LLC loophole – which allows each LLC controlled by a
single corporation to be treated as an individual subject to a $150,000 aggregate
contribution limit. Of REBNY’s political contributions, over 73 percent have
gone to state candidates outside of New York City. The return on REBNY’s
political investment in Albany is clear: the 421-a property tax abatement for
new residential construction continues to balloon. The cost of foregone taxes
from 421-a has increased from $130 million in 2002 to $1.1
billion in fiscal year 2013 – greater than the entire
annual budget for New York City’s House Preservation and Development
Agency. Susan Lerner, executive director of Common Cause/NY, urged “the
Moreland Commission to use the full scope of their investigatory powers to
fully examine this situation and recommend policies to end this exploitation.”

Moreland Commission Subpoenas Real Estate Developers for
Documents

The Moreland Commission to Investigate Public Corruption has
issued subpoenas to three
high profile real estate developers in an apparent effort to examine
whether there is any link between their campaign donations and huge tax breaks
that were granted for several
luxury apartments in New York City. A state law passed this session singled
out five buildings in Manhattan for lower
taxes. Moreland Commission Co-Chair Kathleen Rice has stated that the
commission is committed to investigating loose campaign finance laws and their
relationship with the epidemic of corruption scandals that rocked Albany earlier
this year. “You can say 'it's just a couple of bad apples.’ Is it the political
system itself that is the problem?,” Rice posed. The subpoenas
have all been for documents thus far. No individual has been compelled to
testify at this point. The New York State Board of Elections and the Joint
Commission on Public Ethics have also both been asked to preserve all
documents.

NYC Campaign Finance Board Disburses Public Funds for
Primary Races

The New York City Campaign Finance Board (CFB) has
approved the first round of public funds for 75 qualifying candidates
running in citywide and city council races. As part of the matching funds
program, NYC provides candidates that can raise enough small donations from
constituents in their district with $6 for every $1 raised per donation up to
$175. In the mayoral race, City Council Speaker Christine Quinn received $3.4
million in public funds, reflecting her large haul of small donations. Quinn
was followed by Public Advocate Bill De Blasio who got $2.2 million. On the
Republican side Joe Lhota, former MTA chairman, received $1.44 million. His
spending limit was also increased from $6.42 million to $9.63 million
reflecting heavy election spending by his primary competitor John Catsimatidis,
who is self-financing his campaign. The board also denied
public funds to City Comptroller John Liu’s mayoral campaign, citing
“evidence of substantial non-compliance” with the law. A 139
page CFB report, to which Liu has
released this response, details evidence of reporting discrepancies,
insufficient documentation, and irregular means of attaining contributions by
the campaign. Two former Liu campaign operatives have been convicted of
scheming to route contributions through straw donors – people who contribute
under their own name and get illegally reimbursed later. The CFB’s tough
approach on compliance has helped prevent abuse of the City’s public funds.

NATIONAL

Secret Tax Reform

The U.S. Senate is seeking to reform the notoriously long
and convoluted federal tax code by starting
with a blank slate; eliminating all tax credits and breaks. The Senate
Finance Committee, chaired by Senator Max Baucus (D-MT) and Senator Orrin Hatch
(R-UT), is asking Senators to submit proposals for tax breaks they wish to keep
in the code. Senators, fearful that their proposals will reveal their pet special
interests, have been promised by the committee that their request will remain
private until 2064. Each digital
proposal will receive an ID and special encryption, prior to storage on
password-protected servers. Printed copies will be kept in locked safes. Only a
few privileged Senators and their aides will have access to the proposals. The
lack of transparency over a process intended to bring about reform is
symptomatic of a larger problem on Capitol Hill – the vast and omnipresent
influence of lobbyists and campaign donors. Behind every tax break, which collectively
cost the government more than $1 trillion annually, is an army of Congressmen,
special interest lobbyists or powerful corporate donors. As long as our
campaign finance laws remain broken, the prospect of real tax reform is likely
to remain elusive.

Americans Think Corruption has Increased

The 2013
Global Corruption Barometer, a global survey of more than 114,000 people in
107 countries, by Transparency International reveals that Americans are
increasingly concerned about corruption in government. Transparency International annually
publishes statistics regarding citizens’ perception of corruption and bribery.
Sixty percent of the respondents in the U.S. said that corruption
has increased over the past two years, while only 10 percent said that it
has decreased. Sixty-four percent of Americans think their government is run by
a few big interests, compared to 54 percent of Canadians and 52 percent of
Australians. Of the public institutions in the U.S., three-quarters of
Americans regard political parties as the most corrupt, followed by the
legislature, the media, and public officials. Citizens view the military,
non-governmental organizations and education services as the least corrupt. Huguette
Labelle, chair of Transparency International, recommends that governments
should “respond with concrete action to elevate transparency and
accountability.”

Fareed Zakaria: Money is Root of Problems in Washington,
D.C.

Last week, Fareed Zakaria, host of CNN’s Fareed Zakaria GPS and
editor-at-large for Time Magazine, reviewed the latest summer book on
Washington’s ruling elite, This Town by Mark Leibovich. Zakaria argues
in the Washington Post that the United States government is no longer
defined by three branches but by a permanent class of lobbyists and campaign
contributors. According to an
Atlantic magazine report, 42 percent of retiring House members and 50
percent of Senators go on to work as lobbyists. Compare that to 1974, when only
3 percent of retiring members of Congress became lobbyists after their public
careers. According to Zakaria, politicians today are not particularly greedy or
venal as compared to earlier generations, but the system in which they operate
has dramatically changed. The total cost of the 2010 national elections in
Britain was $86
million. In the U.S. the cost was 75 times greater — $6.3
billion – for the 2012 national elections even though our population is
only 5 times bigger. Harvard professor Lawrence
Lessig points out that members of Congress spend
an inordinate amount of time raising money, while in office. It comes as no
surprise then that they also
vote with keen
attention to their donors’ concerns. And if we fail to change, Zakaria
warns that we may soon meet the same fate as Rome.

Former State Supreme Court Justice Asks Montanans to Fight
for Fair Courts

Citizens United is poised to destroy judicial impartiality,
writes John C. Nelson, a retired Montana State Supreme Court Justice, in the Missoulian.
Montana has a unique system of non-partisan judicial elections, an effort to
maintain the impartiality and independence of the court. In June of last year,
the U.S. Supreme
Court struck down Montana’s Corrupt Practices Act, which banned corporate
contributions to candidates and independent campaign committees. Then in
September, the Ninth
U.S. Circuit Court of Appeals declared Montana’s statutory ban on partisan
endorsements and expenditures in judicial elections unconstitutional. A nation-wide
study by the American Constitution Society for Law and Policy demonstrates that
there is a significant relationship between business group expenditures on state
Supreme Court races and the votes of state justices on business matters.
Whether Democratic or Republican, the more campaign expenditures a justice
received from business interests, the greater the likelihood that he or she
would favor business interests in court cases. Nelson asks Montanans to “fight
for the fundamental right to settle our legal differences in impartial courts.”

NC Successful Judicial Public Financing Program Gutted by
Legislature

This year, the North Carolina legislature passed sweeping
electoral changes to gut the judicial public financing program. Since 2004, the
state has offered public financing to candidates running for seats on the
state’s Appellate Court. To qualify for public funds, judicial candidates have
to raise between $10 to $500 from at least 350 different registered voters, for
a sum totaling at least $39,450. The program is financed through
an optional $3 state tax check-off and a $50 surcharge on attorney’s fees to
the N.C. Bar Association. The intent of the program is to ensure greater impartiality
in the court’s decisions, and it is popular with North Carolinians: 68 percent of state voters favor the program, including 67 percent of Republicans. As N.C. State University professors
Michael Cobb and James Zink explain in a News Observer op-ed, “An electoral
system in which judges routinely court moneyed interests to fund their
campaigns sends a message to the public that justice is for sale."

Friday, August 02, 2013

Every Friday, the Brennan Center will be compiling the
latest news concerning the corrosive nature of money in New York State
politics—and the ongoing need for public financing and robust campaign finance
reform. We’ll also be linking to dispatches from around the country
highlighting the national scope of this crisis. This week’s links were
contributed by Syed Zaidi.

A new analysis by Common
Cause/NY illustrates that millions of dollars have flowed from fracking
interests in New York to state and local campaigns. The investigation reveals
that from January, 2007, to March, 2013, these interests – totaling 183
entities –contributed
over $14 million to state and local campaigns. The money seems to follow the
party in power. In the Senate, the ruling coalition of Republican and
Independent Democratic Conference candidates received $2.22 million, while
Senate Democratic candidates received $496,063. Assembly Democratic candidates
got $784,942, compared to $439,617 for Assembly Republican candidates. The Fair Elections for New
York coalition has called on Gov. Cuomo’s Commission to Investigate Public
Corruption to subpoena information related
to contributions in order to explore the transactions involved.

NYC Campaign Finance Board Releases New Database

The New York City Campaign Finance Board (CFB) has released
new versions of its searchable campaign finance database as well as summaries
of campaign expenditures and contributions. New rules
adopted by the Campaign Finance Board require independent spenders to
disclose expenditures above $100 and certain contributions above $1,000 to the
CFB. The searchable
database allows users to search through individual contributions, campaign
expenditures and independent expenditures via filters such as recipient,
contributor and transaction type. In addition, a summary
page enables users to access an overview of campaign spending, independent
expenditures, and public funds received for all citywide, borough president,
and city council races. Amy Loprest,
executive director of the CFB, stated
that “With the elections just around the corner, we hope these improved
online disclosure tolls will help make more New Yorkers into better informed
voters.”

Public Matching Funds in NYC Amplify Voices of Small Donors

New York City’s public financing program provides matching
funds for candidates who can raise a certain number of small-dollar
contributions from constituents in their district. Data from the latest
disclosure filings show the effectiveness
of the program during this election cycle. Thus far in 2013, candidates
have collected more than $8.7 million from small donors – those contributing
less than $250. This accounts for a 51 percent increase in small donations compared
to the last election cycle in 2009. Donors giving less than $250 constituted 74
percent of all contributors in this year’s elections. Much of the credit for
the extensive participation of small donors can be attributed to the 6-to-1
match New York City provides for the first $175 donated.

NATIONAL

New Poll Demonstrates that Vast Majority of Business Leaders
Support Comprehensive Campaign Finance Reform

According to a survey
conducted by polling firms Hart Research and American Viewpoint on behalf
of the Committee for Economic Development, 87 percent of business leaders say
that our campaign finance laws need a complete overhaul. The poll of
302 business executives across a diverse set of industries also found
bipartisan support for a number of reform initiatives. Ninety-five percent of
business leaders that consider themselves Democrats favor disclosure of all
individual, corporate and labor contributions to political campaigns, as do 88
percent of Republican business leaders. Steve Odland, president and CEO of the
Committee for Economic Development and a former CEO of Office Depot Inc., explains
that “There’s an impression that there is money being used to buy
politicians, and that therefore they are not beholden to the electorate but to
donors.” Eighty percent of the business leaders who responded support reducing
aggregate contribution limits: restricting the total amount an individual can
contribute to all candidates, political action committees, and party
committees.

Banks Meet With Regulators to Water Down Wall Street Reform

Three years after the passage of Dodd-Frank Wall
Street Reform and Consumer Protection Act, an examination by USA
Today reveals that 32.2 percent, or 128, of the 398 rules required by the
act have yet to be proposed. Analysis by
the Sunlight Foundation offers a possible reason. Big banks and financial institutions
have held 2,118 meetings with federal regulators – that is 14 times more than
consumer-oriented and pro-reform groups. Sunlight’s analysis is based on the
logs of the Commodities Futures Trading Commission (CFTC), the Department of
the Treasury and the Federal Reserve Board, accessible through the Dodd-Frank Meetings
Tracker. Financial sector corporations and trade groups were present at 90
percent of meetings at the Federal Reserve Board, 82.7 percent of the meetings
at Treasury, and 74.8 percent of the meetings at the CFTC. Compare that to the
attendance of pro-reform groups: 3.3 percent at the Fed, 13.7 percent at
Treasury, and 4.4 percent at CFTC. CFTC Commissioner Bart Chilton sums
up the problem well: “Lobbying, litigation and lawmakers who have tried to
defund and defang Dodd-Frank have all brought rule-writing to a crawl.
Regulators themselves have become overly concerned about finalizing rules.
Over-analysis paralysis, fears of litigation risks, and the lack of
people-power have all contributed to the slowdown."

Brennan Center Submits Brief for McCutcheon v. FEC

This week, the Brennan Center for Justice submitted an amicus
curiae brief to the Supreme Court in support of the FEC in McCutcheon v.
Federal Election Commission. Federal law restricts
the amount of money a candidate can receive per donor, as well as the total
amount that any one person can donate to all candidates, political parties and
committees combined in an election cycle. Individuals are restricted to
contributing $5,200 to a federal candidate per election cycle. Furthermore, under
the current aggregate limit, one person cannot donate more than $123,200
combined to all federal candidates, parties and political committees per cycle.
Eliminating aggregate limits would essentially allow donors to circumvent the
$5,200 base contribution limit because large donations to political parties and
other committees would become easily transferable to specific political
candidates. The Brennan
Center brief argues that the Court should examine aggregate contribution
limits in light of the fundamental interest in maintaining integrity and public
confidence in our elected institutions.

Tumblr Blog Explores the Founding Fathers’ Views on
Corruption

It is unclear how the founding fathers would feel about
Tumblr. However, recent research does attempt to explain how they would feel
about the avalanche of money in politics. A Tumblr blog by Harvard Law professor
Lawrence Lessig examines the writings of the founding fathers to
contextually evaluate how they used the term “corruption.” In Citizens United
v. FEC, the Supreme Court ruled that corporations and unions can spend money
independently without limits because independent expenditures cannot corrupt
candidates. As the Supreme Court considers McCutcheon v. FEC, a case that
challenges the aggregate limit on each person’s contributions over a two-year
election cycle, it will determine whether restricting the total amount one
person can contribute to political candidates poses a risk of corruption. In
recent decisions, the
Supreme Court has adopted a very narrow view of corruption, limited to individual
quid pro quo exchanges where campaign contributions are traded for policy
outcomes. Professor Lessig’s examination of corruption shows that the founders
understood it to include institutional in addition to individual corruption. Institutional
corruption occurs when elected bodies become dependent on special interests or
on public or private money – anything other than voters. Out of the 325 instances that the term “corruption”
is encountered in the founding documents, 57 percent refer to an
institution, not the individual. Furthermore, out of the instances where the
founders were discussing “improper dependence” as a kind of corruption, they
were more likely to be referring to institutions (67 percent) than individuals
(33 percent). And what about the “individual quid pro quo” corruption that the Supreme
Court has characterized as the only legitimate target of campaign finance
regulation? A mere 1.5 percent of the founding documents use “corruption” in
such a context.

Maine Voters Organize to Protect State Clean Elections
Program

Citizens in Maine are working to repair a popular campaign
finance reform program, after $1.2 million was cut from the state’s Clean
Elections system. The public
financing program awards funds to state candidates if they can raise a
qualifying number of $5-$100 contributions from registered voters in their
district. Now organizers of Maine
Citizens for Clean Elections are knocking on doors across the state to
gather signatures for an initiative petition that would increase public funding
disbursements for house, senate and gubernatorial races. Taxpayer funding would
be replaced by a 15 percent surcharge on all civil and criminal fines and
penalties ordered by Maine courts. The initiative
would also prohibit registered candidates from participating in political
action committees and bar ballot question committees from spending money on
candidate campaigns. Historically, the public funding program has been very popular.
A Portland
Press Herald editorial called it “a success on most counts” and the last
election saw 80 percent of legislators participating.